In July of this year, the U.S. Securities and Exchange Commission (SEC) officially approved the trading application for Ethereum (ETH) spot ETFs, making ETH the second cryptocurrency after Bitcoin (BTC) to enter traditional financial markets in ETF form.
However, four months later, traditional markets have not shown the same enthusiasm for ETH as they did for BTC. The primary reason lies in ETH's narrative as a tech innovation product, which is less compelling to traditional investors compared to BTC's "digital gold" story. Additionally, ongoing sell pressure from Grayscale's ETHE and the SEC's prohibition on staking functionality for Ethereum spot ETFs have further dampened its appeal.
For investors in Ethereum spot ETFs, holding ETH through an ETF currently means missing out on staking yields (~3.5%) while also paying management fees ranging from 0.15% to 2.5%. While some investors may prioritize convenience and security over staking rewards, others may seek alternative solutions or delay their investments altogether.
With recent political shifts, this scenario is changing. The market anticipates improved cryptocurrency regulation, paving the way for Ethereum spot ETFs to introduce staking functionality—boosting their appeal and potentially driving ETH's price upward.
Key Developments:
- November 13: ETF issuer Bitwise acquired Ethereum staking service provider Attestant. Bitwise CEO Hunter Horsley noted that 20% of clients already express interest in staking rewards, with broader adoption expected in coming years.
- November 20: European crypto ETP issuer 21 Shares AG added staking to its Ethereum Core ETP, rebranding it as "Ethereum Core Staking ETP" (ETHC), now traded on Swiss, German, and Dutch exchanges.
- November 22: SEC Chair Gary Gensler announced his resignation by January 2025, increasing optimism for staking-enabled Ethereum ETFs.
Which Cryptocurrencies Stand to Gain?
Direct Beneficiary: ETH
The inclusion of staking in Ethereum spot ETFs would directly enhance ETH's investment appeal, likely contributing to its recent outperformance.
Indirect Winners: Staking and Restaking Sectors
Staking Sector: Projects like Lido (LDO), Rocket Pool (RPL), Ankr (ANKR), and Frax (FXS) have emerged from prolonged consolidation with upward momentum. Notably, LDO and RPL faced SEC lawsuits in June over their staked tokens (stETH, rETH); these may resolve more favorably post-Gensler.
Restaking Sector: EigenLayer (EIGEN) rebounded strongly after hitting a low, holding $3 despite BTC's pullback. Its performance could influence restaking projects like ether.fi (ETHFI), Renzo (REZ), and Puffer (PUFFER).
👉 Explore the latest Ethereum staking opportunities
Traditional Players: Coinbase (COIN)
As a key custodian for BTC and ETH spot ETFs, Coinbase may see increased demand for its staking services, including its liquid staking token cbETH.
Market Dynamics: Sentiment Over Substance
While ETH, LDO, RPL, EIGEN, and ETHFI have rallied, the actual flow of staking business to native crypto projects like stETH or eETH remains uncertain. ETF issuers may opt for in-house solutions (like Bitwise) or trusted platforms like Coinbase.
Yet, in a bull market, sentiment is king—and for the long-dormant Ethereum ecosystem, this resurgence of optimism is a welcome shift.
👉 Dive deeper into Ethereum’s staking revolution
FAQ
Q: How does staking improve Ethereum spot ETF appeal?
A: Staking allows investors to earn yield (~3.5%) on held ETH, making ETFs more competitive against direct holdings.
Q: Which staking projects are most promising?
A: Lido (LDO) and Rocket Pool (RPL) lead the staking sector, while EigenLayer (EIGEN) dominates restaking.
Q: Will Coinbase benefit from ETF staking?
A: Likely—its custody role and cbETH token position it as a preferred service provider for ETF issuers.
Q: Is the staking rally sustainable?
A: Short-term gains are sentiment-driven, but long-term adoption hinges on regulatory clarity and ETF inflows.